Business & Economy

Suez canal crisis & Blockade in 2021 & it’s impact on Global trade?

               Suez Canal is a sea level duct in Egypt acting as a bridge between Mediterranean Sea and Red Sea through the Isthmus of Suez that divides Africa and Asia. The Suez Canal start point is called the Port Said and end point is called the Suez Port. The construction was done by Universal Suez Ship Canal Company and lasted for 10 years and was officially unlocked on 17th November, 1869. It is the fastest sea-route between Europe and other countries around India.

              After the construction, since France and Britain owned the company they formed a treaty of controlling the canal for 99 years and after the treaty the canal would be controlled by Egyptian Government i.e., till 1968. Later in 1956, before the completion of the treaty Egyptian Government nationalized the canal as Britain Government had refused to provide funds for the construction of Aswan Dam across the Nile River, so Egyptian Government decided to take this step so that they will receive funds through the Suez Canal. Britain was not gleeful about this decision and that is when the Suez Crisis began where Israel, Britain and France attacked Egypt for the control of the Suez Canal but Egypt rose in victory. 

                       The tensions between the countries had only reduced at that time due to the interference of UN with the idea of United Nations peacekeeping force to maintain peace and harmony between them and all shipping routes for Israel had been stopped at that time and later in 1967 the Six-Day War started between Arab and Israel where Israeli armed forces attacked Egypt and they remained stunned by the attack. The Suez Canal was then closed till 1975 and 15 merchandise ships which were sailing through were stuck for almost 8 years. In the years to come all the tensions were settled and the Canal was developed and expanded so that the ships could travel both the sides.  

                      On March 23rd, 2021 another crisis was seen in Suez Canal. A ship named MV Ever Given whose start point of travel was Tanjung Pelepas in Malaysia and destination point was Rotterdam in Netherlands was travelling through Suez Canal. The ship was stuck diagonally and obstructed the way for all other ships both the ways. The owners of the ship say that the ship was hit by strong winds and they had to immediately change the course of the ship and that led to this crisis. But few of the economists say that they can also be technical or human errors involved to a great extent for the situation that has aroused. Almost 12% of world’s trade takes place through the Suez Canal and for almost 6 days Ever Given ship blocked the route and affected the world’s economy in a large picture. In the course of 6 days almost 450 ships were halted or had to take the longer route i.e., through Cape of Good Hope. 

                   Various equipment’s were used to remove the ship from that position and on March 29th, 2021 the Canal was free of this crisis and YM Wish, a Hong-Kong based ship was the first to travel in that lane after 6 days. Almost 450 ships which could not move through this Canal sighed a breath of relief and the world’s economy was back to normal.

                    The Suez Canal which is the main route between Asia and Africa for sea-route trade has been developed over the years and used by various countries across the world. Hence the 2021 crisis startled everyone and had a great chance of inflation in the economy. The recovery of Suez Canal is bringing the Economy to its normal state. 

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